Understanding and Resolving the Student Loan Crisis

July, 2019

Washington -- The nation's student loan crisis continues, but without sufficient understanding as to how it came about or how it might be resolved.

There is little discussion of the people who played a big role in its creation and continue to exacerbate it. In previous posts, I've noted a revolving-door, iron-triangle network between government and industry that operates according to these axioms:

• There is big money to be made in student loans
• So put as many people into student loan debt as possible
• And keep them in debt for as long as possible by whatever means necessary

The first is self evident. The federal government spends billions annually on contractors originating, servicing, and collecting student loans. A private student loan industry also thrives, piggy-backed on the federally based college financial aid application system. Federal student loans provide an especially large share of the revenues of for-profit colleges, including those that are traded on Wall Street. If borrowers can't repay federal loans, it's taxpayers who take the loss, not the colleges.

The second is also evident to anyone who follows how higher education is marketed as "opportunity" and student debt is sold as "good debt," even to people who have no realistic chance of successfully completing college or paying off their loans. This is particularly true of the for-profit college sector, which often uses unconscionable methods to entice people to take on student debt. (The independent documentary movie "Fail State" illustrates the dark realities of for-profit colleges.) The revolving-door network at the Department of Education has been especially active of late to weaken the nation's college accrediting system so as to continue to grow student debt, and to repeal regulations designed to curtail abuses.

The third should be evident to anyone knowledgeable about how difficult is it for borrowers to get out of debt. The revolving-door network assures that contractors will not be properly supervised or penalized when they violate the consumer protections of student loan borrowers. The network has been instrumental in raising fees on borrowers in default, keeping them in debt longer, and illegally refusing to cancel the debts of borrowers who were defrauded, borrowers who had earned cancellation through public service, and even veterans who were totally and permanently disabled. See a previous post.

What can be done?

First, there should be a wider understanding of the role of the revolving-door network in the student loan crisis. This includes identification of illegal actions* that have led to waste, fraud, and abuse under federal RICO statutes.

Second, the network should be broken up. Remedies exist in RICO legislation, 18 U.S. Code § 1964. Civil remedies.

(a) The district courts of the United States shall have jurisdiction to prevent and restrain violations of section 1962 of this chapter by issuing appropriate orders, including, but not limited to: ordering any person to divest himself of any interest, direct or indirect, in any enterprise; imposing reasonable restrictions on the future activities or investments of any person, including, but not limited to, prohibiting any person from engaging in the same type of endeavor as the enterprise engaged in, the activities of which affect interstate or foreign commerce; or ordering dissolution or reorganization of any enterprise, making due provision for the rights of innocent persons.
(b) The Attorney General may institute proceedings under this section. Pending final determination thereof, the court may at any time enter such restraining orders or prohibitions, or take such other actions, including the acceptance of satisfactory performance bonds, as it shall deem proper.
(c) Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee....


Third, Congress should open an oversight investigation on all of the above. Airing it out in sunshine is the best disinfectant and is essential to resolving the student loan crisis. As a political scientist, I'm more than a little surprised that the student loan crisis has not already been tackled more vigorously by Congress, which surely must know that at its heart it is also a major civil rights issue, as the victims of the crisis are disproportionately women and people of color. The Center for Responsible Lending has made this clear in a new report issued this month. May it help generate action.

Finally, those in the for-profit college and student loan industries who are sincerely interested in education and embarrassed by what apologists call "bad apples" should clean up their professions. They need to step forward and show that the whole barrel has not been spoiled. Good apples are increasingly hard to find.

______________________________
• Violation of recusal, perjury, conflict of interest, obstruction of audits, obstruction of state law enforcement, loan fraud, wire fraud, racketeering.

Apollo Eleven, Fifty Years Ago

July, 2019

Washington -- On my wall, largely forgotten, is a certificate from the Department of Defense, Manager for Manned Space Flight Support Operations: "Be it known by these presents that [my name] USN served in support of Department of Defense operations during the Apollo XI mission, the first Moon landing flight in July 1969."

Actually, that is a huge overstatement. I was in Venice, Italy, the day of the landing and had nothing to do with Apollo XI. I was meeting with an Air Force captain and a Philco tech rep enroute to a routine inspection of a Defense Communications Agency outpost in nearby Pordenone.

It was hot. We gathered in a hotel lobby in Mestre to watch live television of the landing, about 4 a.m. local time. The tech rep left early, hoping for cooler temperatures up in the Veneto. My captain colleague, a native of Puerto Rico, and I stuck it out as we did not want to miss witnessing the historic occasion. The television showed only the blurriest of views, but the Italian announcers narrated it all convincingly. There were many cheers from our hotel crowd, in many languages.

My thoughts went back to six months earlier, when I had a more significant involvement with the Apollo program. When the Apollo Eight astronauts splashed down in the remote Pacific, I had been the communications watch officer aboard USS Arlington (AGMR-2), on-site and responsible for being in touch with the rest of the world. Circling the moon had been the great Apollo accomplishment to date. Successful splashdown and recovery were not a given and we all breathed easier when we saw astronauts Borman, Lovell, and Anders give us a wave and a thumbs up that they were fine.

We two Americans in the Mestre hotel in July celebrated the moon landing as did everyone else there, as a great human accomplishment that transcended nationality. We got our share of special congratulations when the crowd recognized us as countrymen of the astronauts.

It was a giant leap for mankind, for all humanity. American goals were human goals, and all honorable. It seems so long ago.

Protesting Child Separations

July, 2019

Berlin -- American Voices Abroad (AVA) participated in the "Lights for Liberty" demonstration on July 12, 2019. Ann Wertheimer spoke for AVA at Pariser Platz, at the Brandenburg Gate:

We stand here today in solidarity with thousands of people at hundreds of protests all over the United States. These are the Lights for Liberty: The Vigils to End Detention Camps at the U.S.-Mexico Border.

Tonight, thousands of Americans will go to detention camps at the border, as well as into the streets of their hometowns, to protest the inhumane conditions faced by refugees. The Lights for Liberty demonstrations will shine light on the horrific abuses of the Trump administration.

We may be a small group here tonight in Berlin, but we are in good company. We stand with...many more civil society organizations who have agreed to sponsor this mobilization.

The barbaric policies of the Trump administration have created what is being called a crisis of American values. In fact, no children anywhere should be separated from their parents, and no children should suffer these conditions, and, certainly not children in the care of the American government. [The New York Times, editorial, June 24, 2019]. That is why we are here tonight at Pariser Platz, just steps away from the United States Embassy, and around the corner from the Holocaust Memorial.

A few reminders to our government:

• The United States has a history of intervention in some of the countries from which these refugees are now fleeing. We have toppled governments, supported murderous heads of state, aided in the plunder of natural resources…. The refugees at our southern border are part of the blowback from the displacement of hundreds of thousands of people still seeking safety from US-financed violence. [Patricia Williams, The Nation, June 20, 2018]

• And the United States continues to support violence and inequality in the countries from which refugees come. Our government has a particular responsibility, not just because we are a rich country, but because we are on the demand end of the drug trade and the supply end of arms dealing. This flow of drugs and arms is inherently destabilizing.

• Finally, children are always in a special category. We try to protect them because they are especially vulnerable and because they are not in a legal position to enact decisions on their own behalf. We don’t use them as hostages in political power struggles.

This administration has tried to make immigration appear to be our country’s greatest problem – lying about crime statistics; lying about the numbers of people entering the United States; and ignoring and denying the economic and social contributions made by immigrants. These fabricated threats are intended to prevent us from having an honest national discussion about immigration. They are meant to validate the President’s America-first narrative and to advance his political agenda.

These lies about immigration help to distract us from the real threats to America: the destruction wrought by climate change; the economic insecurity of the poor and the middle class; the instability of a health care system under ongoing attack by Republican lawmakers; the inequality of educational opportunity; and the threat of big money in politics that corrupts our electoral and governing processes. These are the real threats to America.

When children are separated from their families, when asylum seekers and others who want to emigrate are held under inhumane conditions – whether we call them detention camps, concentration camps, or cages – we must remember that the intent is to reinforce power through hate and bigotry.

We know this and so we are here tonight in solidarity with Lights for Liberty. We must close the camps!


As a proud AVA member, I was present in spirit if not in person. I added emphasis to the paragraph above about Americans ourselves being on the demand end of the drug trade and the supply end of arms dealing. That must always be a consideration. Thank you, Ann.

Time to Call Out Racketeering Under DeVos

July, 2019

Washington -- Time was when federal and state racketeering laws applied mostly to mobsters with their numbers scams, protection shakedowns, and gambling enterprises.

No more. RICO (Racketeer Influenced and Corrupt Organizations) laws have become tools to fight corruption in educational settings. When a ring of public school employees in Atlanta, Georgia, corruptly conspired to change students' test scores, they were prosecuted successfully under the state's RICO law. In 2015, eight Atlanta educators went to prison.

Racketeering has many definitions, including money laundering; wire fraud; obstruction of justice; bribery; kickbacks; loan fraud; obstruction of state or local law enforcement; influencing, obstructing, or impeding a federal audit; and more. A key determinant is the existence of a pattern of racketeering activity. Violation of recusal and perjury would likely fit RICO offenses as well, as part of such a pattern.

Which brings us to the question of whether a network of individuals revolving through the U.S. Department of Education constitutes a corrupt organization in violation of federal RICO law, like the Atlanta educators.

To be sure, each of the offenses listed above has been committed at one time or another over several years by federal or federal contractor individuals linked to various for-profit school, lender, or loan servicer enterprises. The cumulative effect has been enormous and devastating to hundreds of thousands of citizens who have seen their consumer protections eliminated and their financial lives and futures ruined because of corruption in the administration of student loans.

The culmination of these activities has now peaked: defiant, scofflaw officials at the Department of Education continue to deny consumers their rights, under law, to fair and competent administration of the student aid programs of the Higher Education Act.

Consider:

• the class action lawsuit brought on behalf of at least 158,000 defrauded borrowers by the Harvard Law School Project on Predatory Student Lending, necessitated by the Department of Education's inaction on their behalf;

• the class action lawsuit brought on behalf of at least 73,000 participants in the Public Service Loan Forgiveness program by the National Student Legal Defense Network, required by the unwillingness of the Department to exercise proper oversight over its student loan servicers;

• seven actions taken by the Department of Education to roll back consumer protections, complied by an expert in student loan law, affecting over 40 million student loan borrowers with over $1.5 trillion in debt;

• the attempt to preempt state consumer law protections for student loan borrowers, which has now been struck down decisively by two federal courts but has not been retracted by the Department of Education;

• the failure to cooperate with the federal Consumer Financial Protection Bureau;

• the refusal to cancel the student loans of 42,000 "totally and permanently" disabled veterans, to which they are entitled by law, despite the pleas of fifty-one state and territory attorneys general;

• that on a rare occasion when the Department actually cancelled loans of defrauded students at a for-profit college, Secretary Betsy DeVos noted she signed "with extreme displeasure," evidencing alarming animosity toward the students she is under oath to protect and demonstrating her true intent to block borrowers from their due.

The persistent unwillingness to follow the law to cancel debt where required, and other willful acts to undermine the programs of the HEA, should be considered a violation of laws against racketeering by DeVos and her revolving-door network.

18 U.S. Code § 1962. Prohibited activities:

It shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprises affairs through a pattern of racketeering activity or collection of unlawful debt.

"Unlawful debt" consists of loans for which the lender or servicer has altered the terms; that is, not cancelled them as required. As to a "pattern of racketeering" activity, lawsuits henceforth might well include such charges so as to lead to discovery, civil remedies,* and possible convictions. This pattern would include the failure to take action against loan servicers that practice misrepresentation as part of a strategy to retain loan revenues, as well as actions to protect servicers from a growing number of lawsuits. This pattern would include permissiveness toward grade-changing at for-profit schools to maintain eligibility for federal student loans, as revealed in a new Hechinger Group investigation. Washington, meet Atlanta.

It is clear to this observer, who has read every relevant GAO and IG report on these matters (and contributed to some of them) and who has been in the executive, legislative, and judicial arenas on federal student loans as perhaps no other, that there are more than policy differences and legal strategies at issue. There is corruption. It's time to identify it for what it is and put an end to it.

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* 18 U.S. Code § 1964. Civil remedies.



Two Neglected Explanations for the Student Loan Mess

July, 2018

Washington -- As the nation's student loan crisis grows, more and more writers, many of them insightful, are offering their analyses and opinions as to how we got into the current mess.

Typically, they point to a withdrawal of state tax support for public institutions, forcing both tuition and borrowing higher. Many also blame federal loan programs themselves, believing that when money is easily available, prices go up.

There are elements of truth to these explanations, but let me offer two others that I think have been woefully neglected and will have to be addressed if the situation is ever to be successfully addressed.

The first explanation is that Congress chose to fund programs that failed to account for state and institutional behavior in reaction to them. It did not start out that way with the Higher Education Act of 1965, which required institutional or state matching funds as a condition of participating in federal student aid programs. But within a decade, Congress began instead to favor Pell Grants and Stafford Loans, which had no such requirements, and by the 1980s the original HEA programs were an afterthought. The rest is history. States and institutions, almost invited by Congress to do so, made college affordability a low priority. Congress had handcuffed itself by failing to employ the tools of fiscal federalism available to it under the original HEA. This was totally predictable and, in fact, was predicted by some of us in the 1980s and onward.

The second explanation, incredibly important, is the rise of for-profit industries in postsecondary education, encompassing both student loan entities and for-profit schools. As originally set up, management of the student loan industry was through either state or non-profit organizations. That changed in the 1990s with the privatization of Sallie Mae and the conversion of state secondary markets to for-profit status. Also in the 1990s, when for-profit schools started to offer stock to investors on Wall Street, they became a potent lobbying force throughout the government. Soon, the Department of Education was staffed at high levels with individuals who moved easily though the revolving door between for-profit interests and government.

The way for entrepreneurs to make money in higher education was through student loans, the more the better. Many people got rich by turning a blind eye to what was happening to higher education affordability, shutting out the the interests of students, families, and taxpayers. Many officials and executives in both industry and government cut corners and acted illegally, most with impunity.

There is ample blame to go around. The responsibility is bi-partisan. The solution to the current crisis is to return to the foundations of the HEA; that is, to take state and institutional behavior into account in all programs, and to lock and bar the revolving door between industry and government.

Corruption in the "Shallow State"

July, 2019

Washington -- Secretary of Education Betsy DeVos has unwisely rescinded the "Gainful Employment" regulation put into place in 2014 to prevent waste, fraud, and abuse of students and taxpayers, largely at for-profit institutions.

The regulation was designed to eliminate programs that did not provide students with gainful employment, comparing their student loan debt to their employment earnings. The GE regulation will not be enforced henceforth and will be totally gone by July 1, 2020.

Both the New York Times and Inside Higher Ed reported that the cost of the Secretary's action would be $6.2 billion over ten years. Without the regulation, students will receive Pell Grants and student loan subsidies to attend programs that otherwise would have been shut down. The cost is confirmed in the fine print of the Secretary's notice.

Question: How is the Secretary's rescission not blatantly abetting waste, fraud, and abuse?

There are Orwellian answers to this question in the Federal Register notice: the GE regulation was targeted too much at for-profit institutions; the Secretary looked for alternatives to GE but could find none other than "buyer beware;" and repealing regulations always saves on paperwork.

To make these arguments, however, the Department of Education had to distort outside research on institutional performance. One researcher has publicly complained, and not for the first time. I am familiar with this body of research myself and conclude much of it is put to ill use in the rescission rationale. Moreover, the Department's own NCES contracted research knocks the DeVos conclusions into a cocked hat.

If the Secretary actually and sincerely wanted an alternative to the current GE approach to program gate-keeping, others are available. The Secretary has broad regulatory authority to make HEA Title IV programs work effectively and efficiently. For example, gate-keeping alternatives might require institutions to meet standards to participate in the College Work Study program, or to receive no more than a certain percentage of revenues from the GI Bill, or require states to have skin-in-the-game to share risk. No such alternatives were pursued, however, because clearly the goal of the rescission is to get billions of taxpayer money back into the hands of the for-profit owners, to go back to the status quo ante, before the 2014 crackdown.

Question: How does this action get around various Executive Orders and OMB guidance designed to protect taxpayers?

President Trump declared in 2017 that any new agency regulation would have to be accompanied by the repeal of two existing regulations. The spirit of this order was to make certain that any new burdens were offset by eliminating old ones. In OMB guidance as to how this must be accomplished, however, scant attention was given to repealing a regulation for which there would be such a high cost – $6.2 billion. The Secretary's GE notice does not explain how her action is consistent either with the letter or the spirit of the president's order or the OMB guidance. Apparently there is a crack in the guidance through which the Secretary can squeeze: OMB excludes Pell Grants as "costs" because they are "transfers." Hence there is no need to consider them, let alone provide an offset for them. Just let taxpayers pay for the waste, and let students at worthless programs suffer the inevitable consequences of student loan indebtedness.

My concern here is not particularly how research can be twisted or even how taxpayer interests can be steamrolled through budget tricks, important as those issues may be. It is, rather, that at the Secretary's command employees at the Department of Education would produce such a document. Who wrote this notice, civil servants or political appointees? I suspect the latter*, but with too much help from civil servants who don't have the fortitude to object.

Much has been said about a "Deep State," a pejorative applied to what many of us consider our most hallowed institutions. Among them is a non-partisan civil service devoted to the rule of law. But with this provocative notice from Secretary DeVos, doing away with a regulation preventing billions of waste, fraud, and abuse, we are seeing that the Deep State is really a "Shallow State." The Shallow State is made up of a go-along-to-get-along cohort in the civil service, always present in any agency but nevertheless a huge disappointment to those who have always taken their oaths of federal employment more seriously.

_______________________________
* Doubtless much of the notice was prepared under the aegis of the acting assistant secretary for postsecondary education, Diane A. Jones, whose long employment history in the for-profit sector constitutes a conflict of interest. She has an extensive record of distorting the work of others and even committed perjury, in my view, at a recent appearance before a House oversight subcommittee when asked about the reinstatement of the troubled accreditor ACICS. She is not alone: see earlier posts for identification of individuals in a revolving door network that has a long record of taking advantage of weaknesses in the Shallow State. To me, the publication of the GE notice is another significant piece of evidence demonstrating that this network has, once again, crossed the line into corruption and racketeering. Abetting over $6 billion in waste, fraud, and abuse is a matter due for appropriate investigations and, for a change, consequences.




The Fourth on the Mall

July, 2019

Washington -- Against the advice of many, I went down to the national mall on the 4th of July to attend the president's speech in front of the Lincoln Memorial, to protest his transparent attempts to politicize our military and appropriate American history for his own purposes.

I am a U.S. Navy veteran, a patriot not a nationalist. I'm also a taxpayer who does not like to see wasteful spending on what can only be a called a Trump rally. The Defense Department had to come up with $1.5 million for a contrived air show; the Department of the Interior had to take $2.5 million from national park entrance fees to stage the event.

Ordinarily, I would just stay away from these provocations, but a few of my friends said it was important to show up and not let the occasion become just one more example of the recent erosion of our freedoms and our heritage. Two of these friends had protested Nixon's use of the U.S. Army to threaten their rights as U.S. citizens in Berlin in 1973, and actually won a subsequent lawsuit protecting their liberties. So who was I to say that our 2019 protest would be meaningless?

Five of us made a few protest signs and wore caps with the inscription "No Man is Above the Law." We could not get tickets anywhere near the speech, so we had to stand for hours in the heat and the rain along the north side of the reflecting pool, hundreds of yards away.

We attracted attention from the surrounding crowd, many of whom were wearing Trump paraphernalia, but not all attention was hostile. One man with a "Trump 2020" hat came up and had his picture taken with us, with all of us smiling. "Freedom of speech, that's America" he said. A woman in her fifties, from Virginia, came up to us, friendly and genuinely curious as to why we would protest. But she quickly said Hillary Clinton was a liar and should be in jail, and that Trump has never lied. One man, also obsessed with the former Democratic nominee, did not like our hats and said they should read "No Woman is Above the Law" and asked why we weren't working to put Trump's former election opponent in jail.

Some in the crowd, as they surged by and saw our signs, were belligerent. "Go back to where you came from!" was one taunt, which for me would be 19th century Sweden, apparently. "USA! USA! USA!" was another frequent chant but it always stopped quickly when we joined in with equal vigor.

Our signs and hats attracted a Canadian who expressed support and several others who apparently felt comfortable around us as opposed to mixing in with the Trump supporters, some of whom were attired more like goon squads than celebrants of the 4th.

Our little group attracted unexpected attention from the news media. The first to show up was ARD, the German radio and television network. Sebastian Hesse interviewed two in our party. His report was broadcast across the ARD audience on July 5th. (Scroll down in the link for the audio.) He and his party also remained close to us for the president's speech.

A reporter from Süddeutsche Zeiting came along, perhaps worried that ARD had scooped him. Soon thereafter, Jonathan Tamari of the Philadelphia Inquirer wanted interviews about our presence, one of which was soon published.

The president's speech itself seemed to leave the crowd flat, puzzled even. I clapped briefly for the mention of Lewis and Clark. The thought crossed my mind that someone mischievously had put a high-schooler's Fourth of July oration into the teleprompter. Many started to leave midway through the speech, when it became clear that Trump was just the announcer for an air show that would have been booed for being boring had it been a real one. Some of us who have spent years around ships, planes, or tanks have a high bar when it comes to being impressed with military hardware.

Nonetheless, the brief appearance of a bat-shaped B-2 stealth bomber drew sufficient rapture in the crowd for a latter-day Leni Riefenstahl to make the most of it. Count on seeing it again and again.

We struggled to get away from the reflecting pool through a crush of people, misdirected to non-existing exits by local police and military personnel who clearly had no experience in moving crowds along. Away from the mall, taunting continued. One of our signs protested spending tax dollars for a Trump rally. A young, overweight, red-faced man with a MAGA hat said. "See, you're wrong, it wasn't a Trump rally. Just admit it!" One of us replied that it was a rally to politicize the military. To which the MAGA man said, "You wouldn't even have a country if it weren't for military might to win our wars."

As we took a rest at a sidewalk cafe, a young woman from Nevada engaged us, curious as to our impressions of the speech. She volunteered, before we had said anything, that it was only military might that made America what it is. I explained my view to the contrary, that it was America's values and will that were essential to our nation's success. I told her I was a veteran, having served in the Vietnam war, where military might did not prevail, nor has it in Iraq or Afghanistan since. I also recalled for her that one of my family's ancestors fought under Lafayette in the Siege of Yorktown, and that in my estimation it was not American military might that won the Revolutionary War, but it was our will to stand for the values of the Declaration of Independence that eventually wore out George III, with the strategic help of the French fleet that bottled up Cornwallis. I could have added that it was the diplomacy of Benjamin Franklin that led to our country's first success in rallying allies to defeat tyrants, something that could well be remembered today.

Not sure how many more protest demonstrations I have in me. As it turned out, this one may have been worth it, if only to show that not all veterans are willing to be politicized, that not all taxpayers are blind to waste. I was glad to see at least a few friendly people among the Trump supporters, to share the regret that all this divisiveness is not good for the country.

Problems with the NU Presidential Search Process

June, 2019

Lincoln -- In the previous post, I recommended to the NU Board of Regents three questions that prospective NU presidential candidates should answer. One was on Nebraska agriculture, one on research and academic integrity, and one on political process.

Soon thereafter, the Lincoln Journal Star reported on the progress of the presidential search and how it is being conducted. Clearly the search committee has different priorities from those I suggested.

Among the search committee's "seven pillars of leadership," attention to agriculture is not mentioned, nor is research, except tangentially. The word "athletics" appears twice; bureaucratic hierarchy gets full treatment; political leadership is narrowly defined as being friendly with the right state legislators; private fundraising ability is a priority, of course.

This is to be expected, I suppose, from a search committee of which there are twenty-three members, but only two are NU faculty.

Agriculture must get more attention in the search for a land-grant university president. Its tribulations are profound, and growing. The future welfare of the state depends on finding solutions.

Closely related is the integrity of research, and the extension of that research into industry, the agricultural sector, and government. An immediate challenge has been laid down in the areas of nutrition, climate, and health by the nation's secretary of agriculture, who is closing down federal research agencies in the nation's capital and moving them to the Kansas City area in hopes of finding nearby, malleable land-grant connections favorable to his political agenda.

The secretary's suppression of nutrition and climate research antithetical to his political mission is well-documented. He has already attempted to undermine the incredibly important nutrition work of a Lincoln-based scientist. He makes no secret that he expects land-grant universities in the so-called red states to do his political bidding. He states, "We will be placing important USDA resources closer to many stakeholders, most of whom live and work far from Washington, D.C. In addition, we are increasing the probability of attracting highly-qualified staff with training and interests in agriculture, many of whom come from land-grant universities."

Here's hoping NU has a president who can stand strong, with the Regents' backing, against these transparent attempts to politicize research.

Red and blue politics aside, the sad fact is that both political parties have done great damage to America's heartland by short-sighted policies. Although it is obvious that the current administration's policies are inimical and downright malevolent toward Nebraska agriculture, the Democratic Party's neglect of rural America is just as destructive, in its own way.

The NU presidential search committee needs more than a hail-fellow-well-met in a Big Red jacket, but that is what it going to get unless the standards for president are raised to the level of the challenges he or she must be prepared to meet, for the good of the state and the country.








Letter to the NU Board of Regents

June, 2019

Lincoln -- An open letter to presidentsearch@nebraska.edu

Dear Nebraska Board of Regents:

You have encouraged members of the university community and the public to submit thoughts on the "qualities, characteristics, and skills" they would like to see in NU's next president.

I am a graduate of NU twice, a member of the Alumni Association, in very good standing with the NU Foundation, and a Nebraska citizen with considerable knowledge and appreciation of the history* of NU. I have worked closely with university officials from the 1960s to the present, often (but not always) in agreement with the direction of the institution.

My response to your invitation:

• Among the qualities NU's next leader must have is an understanding of agriculture and the reasons for its decline as a driver of Nebraska's economy. NU is a land-grant institution with a special responsibility for agriculture; its own well-being is dependent on a thriving agricultural sector. Among the questions any prospective president must be asked: why is Nebraska agriculture in trouble, what must be done to revive it, and what role will NU play? Answers to the questions must be specific and show insight into issues of nutrition, trade, health, climate, and rural policy.

• Another must-have quality in NU's next leader is a record of scientific and academic achievement that demonstrates commitment and adherence to established norms in the pursuit of knowledge and truth. Ordinarily, this would go without saying, but our society is witnessing a breakdown of norms, previously unimaginable, even those in scientific pursuits. Research is increasing funded by those in both industry and government who are eager to see conclusions they pay for. Any prospective NU president must be asked: what are you prepared to do to ensure the integrity of the research process? The answer to this question must be specific as to identifying threats and proposed NU responses to these challenges.

• A third quality in NU's next leader is an understanding of the political process and where NU fits into it. Any prospective NU president should be asked: what is the historical record of NU leadership in the political arena, both the successes and the failures? The answer should contain specifics to demonstrate a knowledge of NU history and give a clear view as to how political challenges will be addressed.

Please feel free to share this with your selection committee and your presidential search consultants. I would be pleased to elaborate further on any of these matters as appropriate.

Jon H. Oberg

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* See previous posts, for example: NU and Wyuka Cemetery; Recalling an Old Budget Controversy; What Would 'Woody' Have Done?



Another Low for Mitch Daniels

June, 2019

Lincoln -- Mitch Daniels, the former governor of Indiana and current president of Purdue University, writes a column in the Washington Post that can only be described as shameful in its pandering and divisiveness.

He extolls the "cultural fiber that an agricultural upbringing once brought to society," and praises "its value and its virtues" as represented in 4-H and FFA youth.

This would be more palatable if Mitch Daniels himself had any claim either to an agricultural upbringing or to its values and virtues. He doesn't.

Mitch Daniels was raised as the privileged son of a drug company executive and educated at Princeton and Georgetown. He will go down in history as the federal OMB director who turned a federal budget surplus of over $200 billion into a deficit of $400 billion, and as the the college administrator who brought predatory for-profit college practices to a land-grant university.

If he has ever been on a tractor, likely it was only for a photo-op.

But Daniels likes to tell shop-worn stories that he thinks resonate in rural America. From his column:

At the Indiana State Fair, held on grounds now surrounded by inner-city Indianapolis neighborhoods, urban kids can witness, in person, the birth of pigs and calves. Once I asked a boy who had arrived at the fair on a school bus from across town, “Do you know where milk comes from?” He said, “Sure. The grocery store.”

That story, governor, is condescending and offensive. First, you should not try to make fun of inner-city kids to try to look good at their expense; second, the story is painful to dairy farmers who have gone out of business or are about to, and who would say the correct answer now is "factories."

In his column, Daniels says he likes to have 4-H and FFA members give him tours. Accordingly, here is my invitation to come to Nebraska and get a first-hand agricultural tour from me, former president of the Rock Creek Ranchers 4-H Club and member of the FFA chapter at Waverly High School.

We will tour dying towns and abandoned farmsteads, a consequence of the "get big or get out" prescription of former Purdue economist and federal Secretary of Agriculture Earl Butz. We will look at monocultures of corn and soybeans, planted "fencerow to fencerow," virtually deserts now, compared to their former environmental diversity. We will look, probably in vain, for any remaining pollinators, their habitat destroyed by agri-business monopolies that dictate cropping practices through the creditors of increasingly desperate farmers.

During the tour, we'll reflect on how this dismal picture came about. Where is all that "cultural fiber" and the "values and virtues" of which Daniels writes? I know a couple of places where it still exists, but they are increasingly hard to find, due to destructive policies and actions Daniels has supported over the years. Gone with the topsoil, so to speak.

After the tour, we could adjourn to my barn for a discussion of how our country really doesn't feed the world, and to the extent we do, we feed it rather badly. We'll have to note how the current administration is ruining export markets, in any case.

We might even have a conversation about how rural values and virtues are at total odds with the personal behavior and many policy actions of the incumbent president, and how Mitch Daniels could strike a blow for universal human values and virtues, not divisiveness, by using his bully pulpit at the Washington Post more responsibly.

Iron Triangles, Part X

June, 2019

Washington -- Republic Report has picked up on startling testimony from last month's Congressional oversight hearing on for-profit colleges. I watched the hearing as it was streamed live and was likewise perplexed by the statements of Department of Education official Diane A. Jones about approval of troubled accreditor ACICS. From the Republic Report:

Jones testified that “it was not the [Trump] administration that decided to change the decision of the prior [Obama] administration”; rather, she said, the Department reinstated ACICS because “the courts made that decision.”

But it was the Trump administration. The courts may have required a new determination, but not the outcome. The Jones statement, under oath, is guileful and perjurious. Thousands of borrowers and families have suffered from the decision. As have taxpayers, who will have to pay the bill for the mess left behind. The beneficiaries of the decision are predatory schools and lenders.

This is not Ms. Jones' first brush with untruthfulness. It is a pattern. She is a long-time industry servant in an iron triangle that from time to time captures the Department of Education to put private profit ahead of public mission.

In the previous decade, when Ms. Jones was Assistant Secretary for Postsecondary Education, she attempted to cover up student-loan subsidy fraud in the Department by claiming that there was no way to determine its existence or amount. She told investigator Amit Paley of the Washington Post that the numbers he reported were flawed, after the Post assembled a panel of outside experts to determine how much was involved. "We don't believe meaningful inferences can be made from the data the department provided," Ms. Jones said, to try to deflect attention from the scandal.

This was months after the Inspector General had already documented illegal claims and had made detailed determinations of the amounts involved, which totaled hundreds of millions of dollars and were independently corroborated by the Post's panel of experts.

Reporter Sam Dillon of the New York Times had written on the same subject a few months earlier and interviewed me about the illegal claims and how they were made. I had retired from the department two years earlier and knew much about the matter. The NYT followed up with an editorial against waste and fraud. The next day, Sam Dillon told me later, he went to the Department of Education to confront officials with evidence that some at the department had actually been party to schemes to defraud the government. He had two former deputy secretaries and one assistant secretary in mind. Sam Dillon was so angry, he told me, that he yelled at the officials because they knew of the schemes all along and did nothing. He tried to write another, even harder-hitting story but was rebuffed by his editors, for reasons unknown. Had he only been permitted to do so, the ensuing history of corruption and racketeering at the department may have been curtailed.

In last month's testimony, Ms. Jones was aided in her answers by questions from Congresswoman Virginia Foxx, who made certain the oversight subcommittee was told once again, incorrectly, that it was a court, and not the Trump administration, that forced the disastrous reinstatement of ACICS.

Staffing Rep. Foxx on postsecondary education matters has been Kathleen Smith, formerly of the Department of Education but also a key figure in the government-industry revolving door going back two decades. Ms. Smith was once a lobbyist representing lenders making the fraudulent subsidy claims that Ms. Jones was intent on covering up. Ms. Smith, while a department official in the Trump administration, was more recently instrumental in cutting off information-sharing agreements with the Consumer Financial Protection Bureau and helped lead the ongoing effort to preempt state attorneys general from acting against unlawful student-loan servicer practices. As key staff to the ranking member of the House committee writing the reauthorization of the Higher Education Act, Ms. Smith landed herself in the iron triangle position to write the laws for which Ms. Jones will create and administer regulations.*

Some of the iron triangle activity has come to light as the result of discovery in 2017 litigation. Hugely problematic is the failure of officials to recuse themselves for conflicts of interest, or for violations of recusals. It is compounded by clumsy attempts by the Trump administration to intimidate the Office of Inspector General, especially as it looks at irregularities in the reinstatement of ACICS. Only the willfully blind cannot see the industry-based, revolving-door network that undermines the mission of the department, at huge cost to students, families, and taxpayers.

As Republic Report notes, Ms. Jones is overwhelmingly conflicted by her past dealings with the very parties she is now ostensibly regulating. Unfortunately, recusal abuse at the department is not a new development. It goes back many years and remains unchecked, even though by law it is a criminal offense.

Ms. Jones testified that she wants everyone to have the same educational opportunities she had. But her actions on ACICS have put some 18,000 students deeper in debt with worthless credits to show for it. Congress has a responsibility to rebuke such testimony.

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*The revolving door recently turned again for Kathleen Smith, who has since become the Washington-based lobbyist for troubled student loan servicer PHEAA.







The Speaker's Dilemma and Options

June, 2019

Washington -- House Democrats have worked themselves into a dangerous dilemma: should the decision to impeach the president be decided on moral or on political grounds? The argument is strong to impeach on the former, given the moral unfitness of the president, but less so on the latter, given the likelihood that a drawn-out impeachment process with no conviction would only tighten vice's, not virtue's, grip on power. Doing the right thing morally might result in political defeat, leaving both morals and politics in shreds.

I think it was a mistake for the Speaker not to act immediately after receiving the Mueller Report, with all dispatch, both to impeach and to censure the president. That would have avoided the current, foreseeable impasse. Democrats would have done the right thing and could have moved on to their legislative agenda. The moral dilemma would then be for Senate Republicans to deal with.

But that did not happen, so what now?

I believe a good option for the House would be to pass a censure action, which accomplishes the moral imperative without the downside of impeachment. There is ample cause for censure, to include failure to comply with Article I powers of the legislative branch. However, the House should also open an impeachment inquiry to gather further evidence on other impeachable offenses and broaden it beyond the questions of the Mueller Report.

The Mueller Report dealt with only two issues: Russian election-tampering and obstruction of justice. The House Oversight and Judiciary committees should look beyond those subjects to include whether the president is fulfilling his constitutional obligation to enforce the rule of law in our overall federal system. The committees should use their powers to look at issues affecting others in our system who are also required to take an oath to uphold our Constitution and statutes, namely governors and state attorneys general. Are they able to fulfill their responsibilities faithfully under law given the actions of the Trump administration?

There are abundant examples of the use of illegal and unethical measures by the president to thwart the rule of law throughout the country, which should be added to the evidence for impeachment. These actions deal with a wide range of issues that adversely affect people's lives. Many have already resulted in lawsuits and petitions by state attorneys general, of both political parties, against the Trump administration. Many have not, leaving Americans with no place to turn when their lives are upended by a failure of the rule of law at all levels of government.

This review would provide an opportunity for ordinary Americans to form opinions on impeachment as it affects their everyday lives, their health and safety, their consumer protections, their human rights under law. Such opinions need time to ripen, once evidence is compiled. If the House censures the president on separation of powers and moral grounds, it will have done at least part of its duty and public opinion can solidify, or not*, on impeachment. In the meantime, the House can get on with doing the legislative work expected of it.

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*There is no guarantee, of course, that voters value the rule of law in their lives above other values they hold. George Will has written, "Trump was elected because many millions of Americans enjoy his boorishness. And he essentially promised to govern as a lout. Promise-keeping would be an unusual ground for impeachment." These are times that surely test Americans' character and values.

What Farmers Are Really Thinking

May, 2019

Lincoln -- While driving a few miles northward from Lincoln to visit the farming community of my youth, where I still have deep roots, I heard Nebraska Governor Pete Ricketts come on the radio to tell a national audience what Nebraska farmers were thinking about the collapse of Trump's trade talks with China.

The governor said Nebraska farmers were telling him to support the president, even if it hurts them. The sacrifice is worth it, to make China stop stealing intellectual property, according to Nebraska farmers to whom the governor talks. The governor also assured the radio audience (twice) that low crop prices were not the result of the trade war, as prices had been low since 2013. Not to worry about the trade war's effect on prices, so to speak.

To my ears, this was the most incredible statement made by a Nebraska governor about farmers since Norbert Tiemann. When asked if farmers were happy with the Nixon Administration's economic policies, Tiemann said he had "never seen any happy farmers any time." Which may have cost Tiemann the next election.

Nebraska farmers I talk to are not all that informed about intellectual property issues with China, let alone willing to lose their farms because of them. Most farmers had never heard of the issue until they were told it was their patriotic duty to be a pawn in the fight over such matters as copyrights and knock-off products. If they claimed otherwise, let alone said they'd willingly risk their farms over it, they'd be taken for liars or fools, and everybody knew it.

And they don't think low prices should be written off so casually by the governor or anyone else, as if prices were merely something farmers grumble about, rather than something to be urgently addressed.

The farmers I talk to are more knowledgeable about how they are being squeezed, as evidenced in this article from the Lincoln JournalStar:

A...report released Thursday by the Federal Reserve Bank of Kansas City shows that agricultural credit conditions continue to deteriorate in the seven states served by the bank.

In fact, some of the worst conditions were in Nebraska, which had the second-biggest year-over-year drop in farm income, the largest drop in capital spending, the biggest drop in farmland values and the largest percentage of ag producers struggling to produce enough cash flow to service their debt.


But my farmer friends and colleagues also know that the Democratic Party is not sure it cares about what is happening in rural America or not. Some within the party are pleased to see the distress visited by President Trump on the voters who supported him. Some believe Democrats should work only on their urban base and not challenge Republicans on rural issues.

This is not only misguided but a sure way for Democrats to lose the next elections at all levels. Are these Democrats even remotely aware of the pain Republicans are inflicting on rural America?

Rural voters have only so much patience before tipping elections away from those who have hurt them so much for so little. China trade practices could have been handled more easily through WTO, TPP, and our allies. If only that had been the chosen course. Farmers know that.

What farmers of all stripes – conservatives especially – are really thinking is at what point do they call a halt to support for a president who repeatedly damages their economic interests, let alone violates on so many occasions their basic sense of values and decency. That point is soon approaching.

Robert F. Smith's Gift at Morehouse

May, 2019

Washington -- Robert F. Smith's loan cancellation gift to 2019 Morehouse College graduates is getting attention for both good and bad reasons.

If I had his attention I'd shout: "Stop Before You Give Again!"

If someone wants to help with the student debt crisis, there are much better ways to do so. I could give Mr. Smith a list of non-profit charities that for a fraction of his generosity could do multiples more good. If Mr. Smith should happen to see this, I have a list ready. It includes my own charity, which has been remarkably effective with far less money.

Among the more reasoned responses to the Morehouse gift was one from Michelle Singletary, a personal finance columnist who understands paying-for-college issues. She raised the "equity" issue but also puts it into perspective. The gift is inequitable, but don't get too upset about it.

Earlier this month I addressed Elizabeth Warren's debt cancellation plan and found it wanting from the standpoints of both individual and institutional equity. My hope is not to discourage such plans, but to show how they can be improved.

Reviewing Two Think-Tank Reports

May, 2019

Washington -- What would we do without Washington think-tanks? Their staffs provide scholarly analyses and recommendations on a wide variety of issues. They are important watchdogs of federal agencies.

Two recent think-tank reports on higher education issues are especially noteworthy, both for their insights and their limitations.

One is New America's report, "Closing the Evidence Gap: Doing More of What Works in Higher Education" by Clare McCann. She takes the Department of Education and the Congress to task for failing to evaluate programs like TRIO and GEAR UP. She identifies the lobby group that has successfully opposed evaluation of TRIO for decades. Too often such studies are loath to take on political realities. That is not the case here.

If anything, however, she could have gone further to give more context to these two programs. They are small potatoes when it comes to overall federal spending on higher education access and success. Pell and the Campus-Based programs, much larger, are not evaluated either, due to resistance not only in the higher education community, but also within the statutorily responsible evaluation office itself, the Department's independent Institute of Education Sciences. Although the situation is now improved with the appointment of Mark Schneider as IES director, when Grover Whitehurst was in the post he proposed an IES legislative authorization that omitted post-secondary programs entirely. Fortunately, the IES statute that Congress eventually authorized contains authority for IES to carry out post-secondary research and evaluation, even though there is currently little meaningful activity under the authority.

As Clare McCann correctly notes, the Government Performance and Results Act (GPRA) is applicable and places an obligation on the Department of Education to conduct performance evaluations of all its programs as well. Too bad GPRA has become a dead letter in the Trump Administration.

Although both the current reality and the historical context are working against evaluations of TRIO and other higher education programs, Clare McCann's report should be on every committee member's desk as Congress goes about reauthorization of the Higher Education Act. All HEA programs badly need better evaluation.

The other report of special note is "Ensuring Accountability and Effectiveness at the Office of Federal Student Aid," by Ben Miller of the Center for American Progress and Jason Delisle of the American Enterprise Institute.

The value of this report is that it pulls together the history of the Office of Federal Student Aid as a Performance Based Organization, or PBO. Of particular help is a discussion of the PBO concept and the other federal offices that became PBOs as well, and how they contrast with OSFA.

Again, however, the report could use broader context. It looks at OSFA in terms of its formal creation and organization as a PBO, more or less antiseptically. For a more complete understanding it would be good to look at the informal networks and communication channels that shaped the PBO from its beginning to its current condition. Such a look is beyond the scope and purpose of the CAP/AEI report, but the following observations hint at how this different lens could affect conclusions.

The CAP/AEI report suggests that excessive waste and fraud in student aid programs in "the 1990s" led to the creation of OSFA as a PBO in 1998. Actually, dysfunctional personnel networks were a more proximate tripwire.

To be sure, the early 1990s were plagued with for-profit school fraud and high student loan default rates, but those problems were quickly addressed by Secretary Richard Riley early in his tenure. Thousands of for-profit schools were eliminated from federal student aid eligibility and student loan defaults plummeted quickly as well. Much credit for this should go to Senator Sam Nunn, who held a series of high-profile hearings on these issues and to whom Secretary Riley gave his pledge to clean things up.

But even as Senator Nunn was pleased at the success of the Secretary's attack on fraud and waste, people in the Department's second tier of leadership were often unable to work out their differences as to how OSFA operated as a part of the larger Office of Postsecondary Education. OPE was headed by David Longanecker as Assistant Secretary, with Maureen McLaughlin as Deputy Assistant Secretary. Both had formidable policy and analytical strengths from their years at the Congressional Budget Office. OPE's Deputy Assistant Secretary for its OSFA component was Leo Kornfeld, whose orientation was operational, based on his many years in the student loan industry. The Clinton Administration in its second term saw the creation of a PBO as a way to resolve leadership conflicts by splitting OSFA off from OPE. OPE would still set policy, but a separate, independent OSFA would handle operations and regulatory compliance for student financial aid programs.

Not that the Department under Secretary Riley had resolved all student loan administration problems prior to the creation of the PBO in 1998. Its Direct Loan contractors in mid-decade fell seriously behind in loan consolidations, making applicants wait weeks and even months to consolidation their loans to qualify for lower interest rates and other benefits. The solution, however, was not the creation of the PBO; rather it was to allow FFEL lenders to consolidate Direct Loans into the FFEL program under the so-called Two-Way Loan Consolidation amendment that Congress approved. That created its own set of problems when FFEL entrepreneurs set up boiler-room operations to lure borrowers into FFEL loans not to relieve a consolidation backlog but to win federal FFEL subsidies. It was the Federal Trade Commission that finally took action against some of the worst of the FFEL operators who misused the Department's name and logo.

After the PBO was created legislatively, Greg Woods became its COO. Unfortunately -- Greg was a talented administrator without conflicts of interest -- he passed away soon after he took the reins at OSFA. His major accomplishment was to move OSFA physically to a better workplace, well distant from the rest of the Department of Education. We are left to wonder how the Woods PBO would have asserted its new independence in combating fraud and waste through statutory and regulatory compliance measures, which were now its primary bailiwick. Appointment of his successor was left to President Bush's Secretary of Education, Rod Paige, who chose Theresa Shaw, a former student loan industry executive, as the COO.

In the Shaw era, OSFA took not only its policy signals but also its compliance approach from Bush Administration political appointees. For example, in 2002 compliance questions appropriately raised of OSFA by FFEL lenders were passed on by OSFA personnel, inappropriately, to political officials, most notably to the office of Deputy Secretary William Hansen, who was officially recused from such decisions because he had been a leading industry lobbyist. In 2003, an OFSA unfavorable compliance review of a different lender was incorrectly reversed after the lender discussed the review with political appointees. (The original finding took four years to be restored.) In 2006, the Inspector General wrote a report condemning OSFA for its failure to exercise its compliance function properly. That same year, Assistant Secretary Sally Stroup at OPE gave inside advice to a lender's lobbyist as to how to deal with an upcoming IG audit.

These examples are merely illustrative of the many informal and extra-legal relationship networks that transcended the formal organizational boxes establishing the PBO legislatively.

Secretary Paige's successor, Margaret Spellings, did not extend Theresa Shaw's appointment as COO for another term. Among the reasons had to be OSFA's failure to police itself: one OSFA executive, Matteo Fontana, accepted stock from a company he was regulating. This was also a time when compliance efforts were so weak at OSFA that student financial aid officials at UT-Austin, Columbia, USC, and Johns Hopkins routinely accepted favors from student loan companies in exchange for recommending them to students as preferred lenders. At a loan servicer, compliance measures of the time coming from the Department were characterized as "pathetic" and "weak-minded."

In other words, looking at the PBO from the standpoint of lobbying and political networks leaves an even less flattering view than the CAP/AEI report, which itself was equivocal about the success of the PBO.

I cannot conclude, based on close personal observation over many years, that the PBO in its first decade of existence improved operations or compliance in any way compared to the former organizational arrangement. Of course we don't know what would have happened had OSFA not been re-created as a PBO, but it's hard to imagine a worse outcome. This is not to discredit some fine work within the PBO done by talented and dedicated employees, but I would also note that too many of the bonuses given out in the Shaw era were based on allowing the PBO to be undermined by political and industry revolving-door networks.

One bright spot for OSFA was the conversion of schools from FFEL to Direct Loans in 2010 and 2011. This accomplishment, however, was greatly aided from the outside by volunteers from Direct Loan schools who undertook the training of their counterparts at FFEL schools.

Regrettably, the second decade of the PBO's existence did not give its reputation an overall reprieve. If anything, the situation grew worse. The aftermath of the Great Recession saw a recurrence of for-profit school fraud that dwarfed what the Nunn Hearings uncovered in the late 1980s and early 1990s. The Public Service Loan Forgiveness program, contracted to servicer FedLoan by the PBO, never got on track and is now a national scandal. The Ombudsman's office, housed in the PBO, never became effective as an advocate for borrowers. Only with the creation of the Consumer Financial Protection Bureau did borrowers gain a real voice in the halls of the federal bureaucracy. The CFPB sued a leading student loan servicer, Navient, for compliance failures that should have been corrected by the PBO. The list goes on and on, the failures escalating, the aroma of corruption permeating the fabric of the entire enterprise.

The CAP/AEI report is valuable as far as it goes. It deserves to be in the information binders of HEA reauthorizers as they look at OSFA as a PBO, but it should not be read as the last word until a more complete history of the PBO is fully told. While I endorse the report's recommendations for the HEA reauthorization, it is clear to me that another series of congressional oversight hearings, like those conducted by Senator Nunn's Permanent Subcommittee on Investigations, will be necessary if Congress and the public want real change. The sooner the better.

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Author's note: Much of the above OSFA/PBO history is public information and available from news accounts of the time. I also know it well because I was often literally in the room, as a civil servant working in the Office of Legislation and Congressional Affairs, from the time of Senator Nunn's conversations with Secretary Riley to the arrival of Secretary Paige. From there onward I pick up the thread of OSFA/PBO decision-making networks as a litigant against student loan fraud, based on discovery and depositions from 2001 onward. Much of that is also public information although little of it has been published.







Assessing Sen. Warren's Higher Education Plan

May, 2019

Washington -- Give Elizabeth Warren credit. She is the only presidential candidate in either party who is addressing the nation's student loan crisis realistically. I have differences with the details of her approach, but that must not overshadow her leadership. Warren deserves praise for three huge policy initiatives:

• She proposes help for millions of borrowers currently in inextricable student loan trouble (often not of their own making), in a way that would also help the nation's economy. Debt relief, through a means-tested approach, needs immediate action. In 2016, candidates Bernie Sanders and Hillary Clinton wrongly neglected the distress of borrowers in favor of vague promises for future generations. Warren's loan cancellation plan for current borrowers, conversely, has now demanded even the attention of those who for years touted student loans as "good debt." The Urban Institute, for example, has begun seriously to analyze cancellation effects and has had to withdraw mistakes in its earlier papers. Economists are now looking more seriously about the positive, life-changing effects of current debt cancellation, as explained in a new paper from the National Bureau of Economic Research.

• She proposes restoration of bankruptcy protections for both federal and private student loan borrowers. Warren is a co-sponsor of Senator Dick Durbin's new restoration bill, the case for which has been spelled out well by Mark Huelsman of Demos. This is not a partisan issue; the companion bill in the House is led by Republican John Katko. Arguments against providing student loan borrowers the same bankruptcy rights as other borrowers have collapsed with the failure of programs that were said to preclude the need for student loan bankruptcy.

• She addresses demographic disparities in student loan burdens. The student loan crisis falls disproportionately on minorities and women. Warren's plan exposes this by showing the distribution of cancellation relief, a heretofore much-neglected topic. Also, by proposing that cancellation be paid for by an annual 2% wealth tax on those with net worth of over $50 million, Warren highlights the huge disparities between the few who are in the stratospheric reaches of wealth compared to millions of borrowers who are not, and knocks back arguments that her overall plan is regressive.

I must also note that Elizabeth Warren is without peer among the presidential candidates for her efforts to oversee the U.S. Department of Education more vigorously. Part of the student loan crisis is a result of ineptitude and corruption at the department. Warren is the founder of the Consumer Financial Protection Bureau.

That said, I have some differences with the Warren plan as announced last month, which suffers from two inequities, individual and institutional.

Previously, I suggested that a means-tested, refundable federal tax credit would be more equitable for all students who went to college in the high-tuition era of the last two decades. It would avoid such problems as unfairness between those in similar economic circumstances who struggled mightily to pay off their loans and those who did not; between those who chose lower priced community colleges or less selective schools and those who did not; and between those who worked to try to pay for college over many years and those who did not. The tax credit could be called the "Tuition Premium Tax Credit," the benefits of which could be used to pay off student debt, or simply used by recipients to recover economically from the high price of college, however it affected them wherever they attended. Such a tax credit would also help remedy generational inequities. The boomer generation benefitted enormously from the long, low tuition era that made paying for college relatively easy. The 2017 tax cut piled more wealth on the boomer generation; it could be trimmed back with savings applied to generational and income-class equity.

I would also limit Warren's free college plan to two-year community colleges (actually first proposed by President Harry Truman). For public four-year colleges, a return to the Carnegie Commission's funding model would strike a reasonable balance between who pays and who should pay, so as not to make the free college aspect of the Warren plan regressive, as some have alleged. The Carnegie model also recognized the importance of private, non-profit institutions, a national resource that could be threatened under Warren's plan.

As to Warren's plan to increase Pell Grants, I'd put the funds instead toward a matching program, like SEOG, that would be more efficient and draw in much-needed state and institutional effort to help students avoid excessive debt. Historically, Pell Grants have not been effective in reducing borrowing. Requiring match would also eliminate many unscrupulous for-profit institutions from federal programs, a workable alternative to Warren's plan simply to make all for-profit institutions ineligible, although that aspect of her plan is also attractive. For-profit higher education is nothing less than a national scandal and one of the primary causes of the student loan crisis.

Finally, as to Warren's wealth tax, it is a good talking point to illustrate how inequitable our society has become in terms of wealth maldistribution, but as a practical matter there is a good case to be made that an effort to relieve student loan debt for those who most need it would go a long way toward paying for itself. Getting millions of borrowers back fully into the economy makes good economic sense.

I don't have a favorite 2020 presidential candidate, but Elizabeth Warren's higher education plan is a formidable offering. The cancellation proposal is getting much favorable attention in polls, even from those without loans. Other candidates should be taking note.













Healthy Foods, Healthy Markets: Part Two

April, 2019

Lincoln -- Part One of this blog encouraged state and local elected officials to get behind a "Healthy Foods, Healthy Markets" movement, to scale up what is happening in Lincoln, Nebraska.

That means you, Nebraska Governor Rickets, and you, Nebraska Board of Regents. Nebraska agriculture is in a tailspin and needs new thinking based on what is good for healthy Nebraska minds and bodies, and good for new markets for agricultural products.

Nebraska, incredibly, imports most of its food, as do other corn-belt states. Why? Because former Secretary of Agriculture Earl Butz said "Get big or get out" and proclaimed that foreign markets for processed foods were the future.

That's now demonstrably wrong. After five decades of such policies, Nebraska rural areas are rapidly depopulating; foreign markets are in a shambles; processed foods are ruining the health of people at home and abroad. See "Planet Fat" in the New York Times.

Part Two invites national candidates for president and for Congress to get behind a "Healthy Foods, Healthy Markets" movement. In 2016, candidate Hillary Clinton had no rural policy and failed to campaign adequately in Wisconsin and Michigan, two important agricultural states. No wonder she lost. Current president Donald Trump has been a market-wrecker nonpareil. His Ag Secretary Sonny Perdue is a warmed-over Earl Butz, (presumably) without the dirty, racist jokes and the tax cheating that landed Butz in prison.

Some Democrats are focusing for 2020 on what they are against: agricultural monopolies. Elizabeth Warren summons William Jennings Bryan; Amy Klobuchar recalls the Granger Movement. They are wise to do so, if only to shame the current generation of meek farmers and ranchers who are preparing themselves to become serfs contracted to Chinese-owned corporations. Most Democrats seeking the presidency in 2020 have no identifiable rural policies at all.

What candidates for national office need is something to be for, as well as against. That's what "Healthy Foods, Healthy Markets" provides. It's hopeful, workable, scalable. It's capitalism* put to work for jobs, for health. That's what rural America needs and what candidates would do well to work into their policy platforms.

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* Many market concepts are spelled out in detail in a 2017 collection of works published by the St. Louis Federal Reserve and USDA. The authors of "Harvesting Opportunity" include agricultural policy experts, economists, businessmen, and bankers.

Healthy Foods, Healthy Markets: Part One

April, 2019

Lincoln -- Heartening news from Lincoln: the Healthy Food Access Kitchen is about to open.

Funded by the local Community Health Endowment, it will prepare nutritious food for the city's most vulnerable children and distribute it through the caterer Kinder Bites. And it will prepare healthy food for those of all ages in Lincoln's neediest neighborhoods through Lincoln Fresh, operated by the Lincoln Food Bank.

According to the Lincoln JournalStar, a local and regional healthy food marketer will soon be sharing space with the new Food Access Kitchen:

"A second business, Lone Tree Foods, will also utilize the space to wash, prep and package locally produced foods (including produce, dairy and meats) for distribution to customers such as schools, hospitals and other retail locations. This partnership will not only result in greater circulation of locally sourced produce, but also support business growth opportunities for local farmers and decrease food waste."

This is great news. Schools, hospitals, and retail locations will start getting more locally sourced produce. (Hospitals especially need it.) Nebraska farmers will have new markets for their produce, dairy, and meat. All this will stimulate market business opportunities and jobs.

Question: Could this scale up and spread to other cities? Answer: Yes, with seed money.

An appropriate source for scaling up would be within the USDA budget, at little or no additional cost to taxpayers. The current federal SNAP (food stamp) program is incredibly wasteful and counterproductive to its own mission, in that billions in SNAP dollars are spent annually by recipients on processed junk foods, especially sugared soft drinks. Ironically, SNAP is partly responsible for the nation's obesity and diabetes epidemics. Other USDA programs, like WIC, do not permit use of federal dollars for the purchase of self-destructive products, so such a limitation would bring consistency to federal policy.

The resulting SNAP savings could be moved within the USDA budget to programs that promote the development of local and regional healthy food markets.

State and local elected officials in states like Nebraska, where the rural economy badly needs new markets and where nutrition-related diseases are epidemic, should be getting behind efforts like those now being set in motion by Lincoln's Community Health Endowment. And elected officials should be demanding changes to USDA budget priorities so as to help fund a movement toward "Healthy Foods, Healthy Markets."

The Scandal is The Scandal

April, 2019

Washington -- It's supposedly a national scandal, how the rich and famous cheat to get their children into elite colleges. The real scandal is that we pay so much attention to it, while ignoring the plight of thousands of students and families who followed the law and have been cheated out of student benefits actually due them. The scandal is the scandal.

To be sure, the rich cheaters in the so-called Varsity Blues scandal deserve what's coming to them, including jail time if that's in store. If there's any doubt, Caitlin Flanagan, writing in The Atlantic, erases it. She is especially hard on the lawyers and high-flying investment professionals who knew the rules but violated them anyway. Heaven knows what else they do in professional life to cheat.

Meanwhile, The Chronicle of Higher Education, in a welcome departure from their usual beats, let reporters Michael Vasquez and Donald Bauman tell the under-covered stories of upwards of half a million student victims of closed colleges:

"All across the United States..., the lives of students and their families have been plunged into unexpected crisis. A Chronicle analysis of federal data shows that, in the last five years, about half a million students have been displaced by college closures, which together shuttered more than 1,200 campuses. That’s an average of 20 campus closures per month. Many of those affected are working adults living paycheck to paycheck, who carried hopes that college would be their path to the middle class.

"When a college fully goes out of business, there is no easy fix for the people caught in the crossfire. Closures can be both traumatic and financially ruinous for students — many of whom are single parents...."

Most of the colleges going out of business are for-profit schools that should never have been allowed to participate in federal programs in the first place. Millions of federal dollars intended for these students are missing. The U.S. Department of Education, staffed at the top levels by former executives of these colleges, is dragging its feet in cancelling the student-loans of their victims, although required by law to do so.

So half a million lives have been disrupted, but there's no major media scandal because no celebrities or elite schools are involved in what is prosaically called, in higher education circles, the Borrower Defense matter.

There is an equally troubling scandal in the federal Public Service Loan Forgiveness Program, under which borrowers are entitled to have the balance of their student loans cancelled after ten years of work in public service jobs. This one is at least getting a catchy headline in the New York Times:
Your Student Loan Servicer Will Call You Back in a Year. Sorry.
This program, with tens of thousands of victims, is foundering because the same officials at the Department of Education who are unwilling to help closed-school victims are also in no hurry to see anyone get benefits under PSLF. Credit NYT reporter Ron Lieber for staying on top of this.

Congress, unfortunately, is not up to holding the Department of Education's feet to the fire on either of these administrative calamities. Congressional hearings, with rare exception, have been almost genteel, focusing on what curative might be found legislatively for the upcoming reauthorization of the Higher Education Act, rather than what should be done right now to investigate corruption and racketeering at the Department of Education. There's much to investigate if there's a will to do it.

Here is a suggestion for both justice and proportionality in the Varsity Blues, Borrower Defense, and PSLF scandals. The Department of Justice should, as a condition of settlement with the rich and famous Varsity Blues perpetrators, require that they pay substantial fines to the non-profit charities representing the Borrower Defense and PSLF victims. That way, lawbreakers who tried to rig the college admission system would be aiding those who only tried to get ahead by following the rules.

That would be a satisfying measure of justice, maybe even better than jail. It would give the Varsity Blues perpetrators an opportunity for redemption as part of contrition. It would be good for the country.

This is not without precedent. For example, as part of a settlement with DOJ, Bank of America made contributions to charities in 2016 as part of a larger settlement.

Which charities would be appropriate beneficiaries of Varsity Blues fines, to help Borrower Defense, PSLF, and similar victims of higher education predators? Here's a start: National Consumer Law Center; Veterans Education Success; Project on Predatory Student Lending; Public Citizen; National Student Legal Defense Network; and the Student Borrower Protection Center.

Short of moral leadership from a Secretary of Education who could repair the damage from all three scandals – it won't happen under the current one – this might be the next best alternative.

Time to Re-think the NU Presidency?

April, 2019

Lincoln -- The resignation of University of Nebraska president Hank Bounds has set off discussion as to what led him to resign and speculation as to who might be next to fill the office. Bounds said he was overworked and wanted to spend more time with his family. That's a good reason.

Sometime soon, however, we should all ask whether this might be a good time for structural or job-description reforms, in view of evidence that the NU president's job is too much for any one person.

There is no doubt that the current university governance structure, which dates from the early 1970s, has had unfortunate, unintended consequences.

The University of Nebraska was once among the nation's prestigious research universities with membership in the Association of American Universities (AAU). Such membership helped attract top faculty, among other benefits. But when the Omaha-based College of Medicine was broken off from the Lincoln-based colleges, AAU eventually forced "UNL" out of the exclusive association. Other universities that kept their medical centers administratively attached to their main campuses did not suffer such a fate.

The existing NU structure also did not save UNL from getting in trouble with the American Association of University Professors (AAUP), creating yet more faculty problems. Although it was UNL Chancellor Ronnie Green who violated (according to AAUP) a graduate student's due process, NU president Hank Bounds was of little help and essentially a bystander in the controversy, which drew unwanted national headlines.

Durward "Woody" Varner, creator of the current structure and the first NU president, was the model of a strong leader who, I believe, would have either charmed or bulled his way out of both the AAU and AAUP controversies. He likely would have persuaded Wisconsin's Biddy Martin and Michigan's Mary Sue Coleman to drop their effort to remove UNL from the AAU, something then-UNL Chancellor Harvey Perlman could not do. And Woody Varner would not have been a bystander to the state legislative interference that got UNL into trouble with the AAUP. When legislative interference threatened NU in the 1970s, Varner persuaded the Board of Regents to sue to retain University independence, and he won.

But even for Woody Varner, the NU presidency may have been too demanding. He resigned unexpectedly to take a job with the NU Foundation. Which raises the question of whether the current structure expects too much of any individual.

On top of that, NU faces difficult times ahead because Nebraska's agricultural economy is failing. Hank Bounds recently put together an impressive attempt to show how the University can help the state's economy, but it has no urgent or visionary emphasis on agriculture, where it is most needed. And even his limited vision is hardly shared at the statehouse, where the executive branch is in one-party control and still looking to the farm-policy philosophy of Earl ("Get Big or Get Out") Butz* as a lodestar, which has long since lost its luster.

Rick Ruggles of the Omaha-World Herald has summarized some of the issues facing the next president. But the failing farm economy is not listed, nor is the fact that whoever the NU president is, he or she will face intense pressure from the agribusiness lobby to acquiesce in, if not outright assist in, the further monopolization and consolidation of Nebraska agriculture, which is a part of the problem.

My recommendation to the Regents is to look at the NU governance structure at least to note how it has not been a ringing success, then write a job description for the next NU president that is attuned to the times. Relieve the president of administrative duties that wore out Hank Bounds. Instruct the presidential search organization to look for a leader who can stand up for the University on the big, national reputation issues, and who has a vision to fulfill the land-grant university's mission to create a robust rural economy. That means people like Tom Vilsack and Mark Dayton, Wes Jackson and Anna Johnson, should be consulted in the search. As agriculture goes, so goes the University.

Woody Varner created an office of the presidency at Varner Hall with big shoes. The Board of Regents should try to fill them.
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*Earl Butz was U.S. Secretary of Agriculture under Presidents Nixon and Ford until he resigned over telling one too many inappropriate jokes. He later went to prison for tax-evasion. He was an agricultural economist from Purdue University who championed large agribusiness, corporate farming, and consolidation of farms.

Eyes on the Storm Lake Forum

March, 2019

Lincoln -- This Saturday's Heartland Forum in Storm Lake, Iowa, is a chance for Democratic presidential candidates to show their Rural Policy bona fides.

Most are dodging the forum, showing they have none. Elizabeth Warren will show up and, if anyone is paying attention, lay out an impressive platform. Iowa Democrats might just take notice and move her to the top of the polls. National Democrats who understand that winning in rural states is the key to regaining the Senate and the Presidency might also take notice.

Warren so far is the only candidate in either party who demonstrates a sufficient appreciation of the real problems facing farmers and rural economies. And rather than wringing her hands about it, as do Bill Galston (at Brookings) and Paul Krugman (in the NYT), she knows what she would do about it.

Here are the closing passages in Warren's otherwise wonderfully policy-wonkish platform that especially got my attention:

More than a century ago, during the Gilded Age, prairie populists joined together to fight for farmers during a time of massive economic transformation. They understood that working on the farm was honorable work that deserved to be recognized just as much as other occupations.

In his famous “Cross of Gold” speech, William Jennings Bryan said: “The farmer who goes forth in the morning and toils all day, begins in the spring and toils all summer, and by the application of brain and muscles to the natural resources of this country creates wealth, is as much a businessman as the man who goes upon the Board of Trade and bets upon the price of grain.”

Like Bryan, I will fight for farmers — “for this broader class of businessman.” I want Washington to work for family farmers again, not just for the agribusiness executives pocketing multi-million dollar bonuses or the Wall Street traders sitting at their desks speculating on the price of commodities. I want family farmers to be fairly rewarded for their hard work. That is how we build an economy that works for everyone.


Nebraskans: Are you paying attention? Are there any prairie populists left in the home state of William Jennings Bryan? From what I hear, not many. Some – surely not all – Nebraska and Iowa farmers are saying that they are not concerned about low ag prices; that this is a sacrifice necessary to stop unfair Chinese trade practices in high-tech computing.* Or something. Never mind that most farmers had never heard of the esoteric technology issue before. Anything, even losing the farm, is apparently not too much to rationalize years and years of voting with the "Wall Sreet traders" and the monopolists. William Jennings Who?

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* An Iowa farmer told the Washington Post: “As the farmer sees it, we’ve had times a lot worse for grain prices as we’ve got right now. We know China’s been screwing us for years, not only on farm products but on technology. We know we can duck our heads and pull our boots on and get through this, and, in the long run, the whole country is going to be better off."